A candidate would only have to cite national or state statistics showing disparities in conviction rates for people in the protected class compared with people in non-protected classes. Those statistics abound.

Once a candidate establishes that disparate impact, employers are on the hook to prove that their screening policy job-related and consistent with business necessity. That involves two steps:

Use the “nature/time/nature” test the EEOC describes in its 2012 guidance on using criminal records in employment decisions. Sometimes called a “targeted screen” or “Green factors,” this involves considering the nature of the offense, how long ago it occurred, and the nature of the position.

AND

Either conduct an individualized assessment OR show that your screening policy distinguishes between candidates who pose an “acceptable risk” versus “unacceptable risk” and prove that the conviction has direct bearing on a candidate’s ability to do the job.

A little confusing, but not wildly different from established EEOC guidance (leaving aside the vagaries of establishing acceptable risk versus unacceptable risk and direct bearing.)

You’re not out of the woods yet, though.

Even if you prove that your screening policy is job related and consistent with business necessity, you still might lose in court. That’s because the FEHC regulations give plaintiffs a final chance to win the case by showing that a “less discriminatory alternative policy or practice” could achieve the employer’s goals.

Huh?

Although the text of the law includes some examples (including "a more narrowly targeted list of convictions"), we won’t know what courts will accept until, unfortunately, employers get sued.

FEHA Enforcement And Penalties

You may be wondering whether these new rules apply to you. Most likely, they do.

In fact, they cover nearly every employer in the state.

The law applies to both public and private employers with more than five employees. (An existing ban-the-box law in California that restricts the timing of inquiry into criminal history applies only to public employers.) Only employees working in California can bring a claim against the employer. That means employees working outside the state can’t bring a private suit under this law. However, the state could potentially bring an enforcement action, and an out-of-state employee could still make a claim to the EEOC.

Once a candidate or employee submits a complaint, the DFEH can take one of two actions:

Issue a “right to sue”letter. This letter allows the candidate or employee to file a private suit in court.

Investigate the complaint and attempt dispute resolution. Dispute resolution typically involves settlement or dismissal of the claim by the employee/applicant. If there’s no resolution and the DFEH believes there is actual discrimination, the DFEH may prosecute the case in court on the employee’s behalf.

If the agency decides to pursue the second option, it may coordinate with the EEOC and file a case with the EEOC on the employee’s behalf.

Per their website, “DFEH files signed complaints with the U.S. Equal Employment Opportunity Commission (EEOC) if the matter falls within the jurisdiction of that agency. As a substantially equivalent agency, DFEH’s findings are usually accepted by EEOC.”

As for complaints about these new DFEH regulations, though, the DFEH would likely keep the case itself.

A settlement agreement or a court decision would determine the penalties, which could include:

Back pay (past lost earnings)

Front pay (future lost earnings)

Hiring / reinstatement

Promotion

Out-of-pocket expenses

Policy changes

Training

Reasonable accommodations

Damages for emotional distress

Punitive damages

Attorney’s fees and costs

Background Check Practices To Stop Now If You're In California

As I mentioned, the newness of these provisions and the vague language in some areas practically guarantee that some employers will end up defending their practices in court.

The best thing you can do for your company today is to minimize the risk that you’ll end up in court and maximize your chances of winning a case if you do end up there.

You should consult with your organization’s attorney as soon as possible for legal advice. Discuss this list of employment screening practices that all California employers should stop as soon as possible.

1. Stop relying on an outdated screening policy

If you haven’t reviewed your employment background screening policy with a qualified attorney since the announcement of these new regulations, do it now. July 1 is right around the corner. You will very likely need to make at least a few adjustments to your screening policy. And, of course, your written policy should demonstrate consistent application of screening rules from applicant to applicant.

2. Stop using a bright-line policy or ignoring individualized assessment

Before these regulations, many employers (in California and across the country) relied on what’s called a “bright-line” policy that automatically excluded people with certain convictions from certain jobs. Federal adverse action requirements still apply, but employers generally didn’t conduct individualized assessment on people whose records included an offense proscribed by the bright-line policy.

Now, though, conducting individualized assessment on every candidate with a criminal record offers better protection against FEHA claims. Ask for context around the offense and about the candidate. Showing that you’re making a good-faith effort to comply with EEOC guidance can help strengthen your case.

California law no longer allows a general pre-adverse action notice that simply alerts the candidate that some information in the background check may lead to an adverse employment decision. Instead, you must cite the specific offense or offenses leading you to consider not hiring. Note that this provision applies even if you do the background investigation yourself. That’s in contrast to the FCRA, which only applies if you use a CRA to conduct the investigation.

4. Stop considering misdemeanor marijuana possession convictions over two years old

This one’s refreshingly simple. You can’t consider this kind of conviction in your employment decisions, period. Which leads me to one final thing to avoid ...

5. Stop using the services of a CRA that reports information you can’t consider under California state law

As I mentioned, the new regulations ban employers from considering misdemeanor marijuana possession convictions that occurred more than two years ago. And existing CA laws ban consideration of arrests that didn’t lead to a conviction.

How would you prove you didn’t consider these factors in your employment decision if they're among the information your CRA returns to you as part of a background check?

If your CRA doesn’t do this for you, it’s time to look for one that does.

A Step Beyond EEOC And Other Fair Hiring Rules

Before the DFEH regulations, considering job-relatedness and consistency with business necessity would typically stave off discrimination claims from candidates with criminal records.

Starting July 1, you have to go a step further to protect your organization in California. You have to make sure that your policy is “narrowly tailored,” meaning no less-discriminatory alternatives would achieve the employer’s goals.

I wouldn’t recommend continuing any of the five common background check practices I’ve listed here. But definitely don’t keep using your pre-amended FEHA screening policy.

If you haven’t already, set up that meeting with an attorney who specializes in California law today.

It’ll help you make sure you’re being fair to your company as well as to candidates.

Elizabeth McLean

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At GoodHire, Elizabeth McLean monitors all things FCRA and EEOC. That means she follows new legislation and court decisions and advises the company on processes that follow compliance best practices. Elizabeth earned an advanced FCRA certification from NAPBS in 2015.

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